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Best placed to grow?
European cities hotel forecast for 2018 and 2019
April 2018
2
Overview
Best placed to grow in 2018 and 2019
European cities hotel forecast for 2018 and 2019
The 7th edition of PwC’s European cities hotel forecast for
2018 and 2019 analyses past trading trends and provides
econometric forecasts for 12 cities, all national or regional
capitals of finance, commerce, culture or tourism. This year
we also look at some key challenges facing hotels, including
profitability erosion, responding to changing guest needs,
the threat of overtourism and the sharing economy. We also
look at what the record trading metrics mean for deals
and investment.
3
European cities hotel forecast for 2018 and 2019
2
017 was an exceptional year for international travel in In 2019, Paris jointly tops the growth chart with Lisbon,
Europe. Record travel demand pushed volumes up to with around 6.5% growth apiece forecast. Porto, Frankfurt,
671 million international tourist visits, an 8% increase on Amsterdam and Prague also exhibit strong growth
2016. Growth was driven by extraordinary results in the expectations. London and Berlin are expected to see
southern and Mediterranean region, where tourist arrivals RevPAR strengthen.
were up 13%, according to the United Nations World Travel
Organisation (UNWTO). This record growth was primarily T
here are plenty of challenges facing the sector.
underpinned by the improving economic outlook across the We highlight four issues: profitability erosion as
Eurozone which continued to propel business and leisure increased RevPAR fails to automatically translate into
travel. Besides the strong demand from intra-European increased profitability; changing guest needs, how
markets, the US, China and the return of demand from can hotels can provide what new generations and new
Russia were significant influences. market segments want? the sharing economy – ignore it
or embrace it? and overtourism, an issue being tackled
H
otels were a major beneficiary of this strong demand, by some cities such as Amsterdam, Venice and Barcelona.
which was also supported by limited overall growth in When do cities have too many visitors?
new supply across the region. The majority of gateway
cities and key resort destinations saw strong RevPAR E
uropean hotel transaction volume reached €20.9 billion
growth (a key sales metric) in 2017. Many hotel groups in 2017. This was an 11% increase compared to 2016 deal
cite plans to take advantage of the boom to exploit new volume and surpassed the record level achieved in 2015.
growth opportunities, launch new brands, new generational This growth was driven by a resurgence in UK hotel
concepts and to make acquisitions to grow portfolios. investment activity in 2017 and record levels of investment
in the Spanish hotel market.
H
ow long can this good fortune continue? While there are
plenty of geopolitical headwinds, we remain cautiously The
start of 2018 has seen a strong level of investment
optimistic and our latest expectations are for further fairly activity in the UK through the sale of SACO serviced
strong RevPAR growth overall in Europe. With occupancies apartments and with Lone Star’s sale of its Mecure/Hilton
already at high or record levels, it’s primarily ADR driving portfolio and Starwood Capital’s sale of its Principal/
growth. Some cities hope to become winners from Brexit, De Vere portfolio reportedly progressing well. The Spanish
e.g. the European Medicines Agency, which used to hotel market has also seen Blackstone’s takeover bid for
Hispania and HNA’s stake in NH Hotels being brought
generate around 40,000 annual London room nights, is
to market. Put together with the continued European
relocating to Amsterdam. Others hope to benefit from
and international interest in the German hotel market,
corporate relocations from London.
we anticipate European hotel transaction volume to
I
n 2018, we expect the strongest RevPAR growth in Porto, moderately increase in 2018 from 2017 levels.
whose continued tourism success story means over 10%
RevPAR growth is forecast. Amsterdam, Lisbon and
Prague all see around 7% growth. Paris is seeing signs
of a sustained recovery and for it and Milan we expect
3.6% and 3.9% RevPAR growth, respectively. Other cities 2017 was an exceptional
seeing growth include Geneva (+2%), Rome (+1.8%), and
Berlin (+1.3%). year for hotels but we remain
A
slower pace of growth is expected in London (+0.6%) cautiously optimistic for
where Brexit uncertainty, a fizzling out of the weak pound 2018 and 2019
effect and a supply spike are expected; Only Frankfurt
(-0.2% as the fair cycle impacts) and Zurich (-1.9% as hotels
lower ADR in response to increased competition i.e. supply
additions) are expected to show declines in 2018.
4 European cities hotel forecast for 2018 and 2019
5
European cities hotel forecast for 2018 and 2019
Contents
Overview 3
The forecasts: city prospects 6
Which cities will be the most expensive, the fullest
and have the highest RevPAR? 9
Economic, travel and supply drivers 14
Four challenges facing hotels 20
Deal talk 24
The European cities forecasts 26
Methodology for the hotel forecasts 2018 and 2019 48
Further reading 49
Contact 50
6
The forecasts:
City prospects in 2018 and 2019
European cities hotel forecast for 2018 and 2019
European cities saw exceptional hotel performance in 2017. Almost all the cities
in this latest forecast are expected to see further growth in 2018 and 2019.
Strong demand has propelled some into the spotlight yet again; others have
moved up or down the growth rankings. In 2018. Porto leads the growth pack
with just over 10% RevPAR growth anticipated; Amsterdam and Lisbon could
see around 7% RevPAR growth and further robust gains are expected in Prague,
Milan and Paris. Geneva and Rome are also forecast to see some moderate
growth, but the pace is expected to slow in London in 2018. Paris has shown
sustained recovery and shares the top spot in 2019 with Lisbon, with around
6.5% RevPAR growth expected for both cities.
What’s driving the growth? Accessibility is an important differentiator, as Lisbon and
Porto have demonstrated with better air connectivity.
Each city has its own story to tell with its own specific drivers Investment in transport infrastructure can facilitate tourism.
but generally, the performance of Europe’s cities displays some Berlin’s Brandenburg Airport could finally open in late 2020;
common themes. Continuing global and regional economic Lisbon reports tourism expansion could be constrained by
recovery following the financial crisis has fuelled strong leisure lack of airport capacity. In Geneva, airport investment and
and business demand for travel and hotels. modernisation currently precedes a push for more long haul
Many are gateway cities, capitals of culture and tourism and international leisure travellers.
magnets. Performance reflects Europe’s position as a key Safety and security is a crucial issue for leisure travellers.
tourism destination and the continued demand from travellers Witness the move away from North African destinations in
to visit exceptional short break and holiday destinations. recent years and the incipient comeback of Morocco, Egypt
Many of the cities are also regional or national capitals of and Tunisia. Perceived safe environments such as Spain,
finance and commerce and business travel is their lifeblood, e.g. Portugal and the Czech Republic have benefitted and are
75% of Frankfurt’s tourism arrivals are business visitors. expected to continue to benefit.
Some cities attract both business and leisure tourists and events Supply constraints or oversupply are also a factor helping
remain a key catalyst. Fairs and congresses remain a mainstay or hindering performance. A lack of new supply in Prague
of German demand and their cyclicality is reflected in hotel is reported as boosting ADR. In other cities, like London,
performances. Every second year (2019 will be the next) the 11 imbalances can cause a headache for hoteliers for a while.
day International Automobile Fair (‘IAA’) comes to Frankfurt, Others prosper despite supply imbalances.
attracting 800,000 visitors. It’s not just Germany that sees an
uplift from cyclical events, The Farnborough International The sharing economy continues to boost travel and create
Airshow (‘FIA’) comes to London this year and returns to Paris positive perceptions/experiences of Europe’s destinations but
in 2019; the GSMA Mobile World Congress is in Barcelona at the same time may absorb room nights from hotels.
again in 2018 and Amsterdam Dance Event 2018 is the world’s Tourism is a highly competitive global market and countries
biggest Club festival and Amsterdam’s leading electronic music and cities seek to gain market share. France has set ambitious
festival, with over 400,000 visitors expected. Other cities, such tourism targets and demonstrated the political will to accelerate
as Geneva and Lisbon, are leading MICE markets. visa procedures and reduce waiting times at airport borders,
which should result in tourism growth.
2018 forecast: 7
Porto, Amsterdam, Lisbon and Prague forge ahead
European cities hotel forecast for 2018 and 2019
So how does the travel boom in Europe Geneva, home to over 400 international organisations and
non-government organisations (‘NGOs’), could see 2% RevPAR
play out in the markets we have analysed? growth in 2018.
In 2018, the highest potential growth is forecast for Portugal’s Although Rome is one of the leading hotel markets in Europe,
tourism star, Porto, which could see a further 10.3% RevPAR performance growth recorded in 2017 was very limited,
growth, on top of four years of consecutive double digit growth. especially when compared to other major markets in Italy,
2017 alone saw almost 21% RevPAR growth. Amsterdam is such as Venice, Milan, and Florence, which all saw substantial
next up, with 7.1% RevPAR growth, after double digit growth increases in RevPAR. For 2018, we expect almost 2% RevPAR
in 2017. Amsterdam’s growth is driven by strong ADR gains. growth, mainly driven by an increase in ADR, which is still
Lisbon also expects a 7% gain in RevPAR, as the Eurovision below pre-crisis levels. Berlin’s performance was dampened
Song Contest and the Web Summit support demand, and by the insolvency of the Berlin-based Air Berlin, new supply
follows 22% growth last year. Prague makes the top four with growth and the strong growth in the sharing economy, which
almost 7% growth reflecting constrained supply, buoyant has been cited as a pressure by hoteliers.
weekend travel and a return of Russian tourists. See Table 1.
At the opposite end of the table to the leaders, the pace
Milan achieved almost double digit growth in 2017 supported of growth is expected to slow in London in 2018. Frankfurt
by the EXPO legacy and we expect further growth of almost and Zurich are expected to see no growth. Frankfurt’s hotel
4% this year. Tourists came back to Paris in 2017 as safety performance is traditionally slightly volatile due to the
concerns appeared to ease and Paris saw around 8% growth last biennial scheduled fairs and RevPAR grew by 4% y-o-y in 2017.
year (after a 14% fall in RevPAR and smaller declines between In Zurich, a continuous increase in supply and flat demand, has
2013-2015). Aided by favourable economic growth, this year meant Zurich’s hotels have turned towards competitive pricing
we expect around 3.6% further RevPAR growth. strategies. Falling ADR and flat occupancy is exacerbated by
large supply additions. We forecast a 1.9% decline in RevPAR
for Zurich in 2018.
Prospects are rather encouraging in Paris after the solid rebound of
2017. The market is not yet back to the levels of 2015 in terms of
RevPAR, but we can expect to be there by end of 2018 - early 2019.
Ronan Keravel, Director Hotel Asset Management, ATREAM, 2018
Table 1:
Best placed for growth
RevPAR (local currency) growth rates
City 2018 RevPAR growth City 2019 RevPAR growth
Amsterdam 7.1% Amsterdam 3.5%
Berlin 1.3% Berlin 2.0%
Frankfurt -0.2% Frankfurt 4.3%
Geneva 2.0% Geneva 1.5%
Lisbon 7.0% Lisbon 6.5%
London 0.6% London 1.9%
Milan 3.9% Milan 2.6%
Paris 3.6% Paris 6.4%
Porto 10.3% Porto 5.2%
Prague 6.8% Prague 3.4%
Rome 1.8% Rome 1.5%
Zurich -1.9% Zurich 0.5%
Source: Econometric forecast PwC 2018 Benchmarking data: STR 2018
8
2019 forecast:
Paris makes a strong comeback, as growth beds in
European cities hotel forecast for 2018 and 2019
We expect further growth in all the cities in 2019 but it is particularly Paris that
stands out. The French capital is expected to enjoy a sustained comeback with
6.4% RevPAR growth expected, driven by economic improvement and recovery
from historic terrorist events.
Lisbon and Porto stay up in the growth table but the pace of In 2019, Berlin’s growth picks up slightly, driven by a marginal
growth for Porto halves to just over 5%, still not bad compared uptick in occupancy and ADR, and the city sees 2% RevPAR,
to growth in some other cities. Frankfurt sees a good fair and as economic growth continues and tourism arrivals stabilise.
congress year in 2019, with the IAA returning and the city
In 2019, some modest growth is expected to return to London,
expects around 4.3% RevPAR growth. Frankfurt hopes to
despite uncertainty and potential Brexit related issues, as
capitalise on corporates and organisations leaving London
economic growth is expected to stabilise, and y-o-y comparables
pre and post Brexit, and so far, there are reports that several
become less challenging. Geneva is expected to see a marginal
international banks have already decided to move to Frankfurt
fall in occupancy in 2019 but 1.7% growth in ADR drives
and others (like Goldman Sachs) plan to enlarge their
continued RevPAR growth of around 1.5%. Rome also sees
operations in the city. 2019 has the potential to be a positive
1.5% RevPAR growth in 2019, mainly driven by ADR, which
year for Frankfurt’s hotel sector.
remains below pre-crisis levels. In Zurich, occupancy sees a
Amsterdam too hopes to capitalise on Brexit. The European 1.3% gain in 2019, to 73%, giving a marginal RevPAR uptick
Medicines Agency (EMA) will relocate to Amsterdam in 2019. of 0.5%.
The EMA is reported to generate around 40,000 room nights a
year. Nevertheless, in 2019 Amsterdam’s growth slips a little,
however 3.5% RevPAR growth is still anticipated, driven by
continued economic growth.
Milan’s hotel market should continue to grow, driven by the
EXPO legacy, international events and increasing leisure
demand, with RevPAR forecasted to increase by 2.6% in 2019.
Which cities will be the most expensive, 9
the fullest and have the highest RevPAR?
European cities hotel forecast for 2018 and 2019
PwC’s research shows that while growth remains a dominant theme it’s not
just about growth rates and the absolute levels of trading are a key piece of
the hotel jigsaw in each city and analysis of three key metrics in absolute
terms shows a very different picture.
The highest occupancies The cost of a hotel room in Geneva and Zurich partly reflects the
appreciation of the Swiss franc and exchange rate assumptions
The highest occupancies are forecast to be in London in 2018 against the euro.
(despite high supply additions) with 82% occupancy and
Amsterdam (also despite high new supply), with almost 82% Berlin and Prague’s ADR remain below €100. In Prague,
occupancy. Prague is hot on their heels, with 81% occupancy. performance measured in euro has been positively impacted
Lisbon, Berlin and Porto should have occupancies in the by CZK appreciation after the Czech National Bank exited the
high 70’s. currency intervention regime in 2017. Berlin has a relatively
strong midscale segment, which leads to a quite low ADR.
Remarkably, all the other cities have occupancies in the mid to
low 70s, reflecting strong demand and perhaps a structural shift The ADR rankings for the top 7 cities, remain the same in 2019.
towards more branded budget hotels, a higher proportion of
chains in some countries, as well as access to online distribution The highest RevPARs (€)
channels and a greater propensity to travel.
Interestingly, the RevPAR rankings remain the same in both
Prague and London top the table in 2019 with occupancy at 2018 and 2019.
82.3%; followed by Amsterdam, at almost 82%. There is some
shifting in relative positions below these three in 2019, but all Paris tops the chart with an expected RevPAR of €176.3 in 2018
the cities see occupancy continue in the 70’s. and €187.6 in 2019. Geneva shadows Paris with €170.3 and
€172.9 in 2018 and 2019 respectively. Zurich follows in third
place with €142.7 (2018) and €143.5 (2019).
The highest ADRs (€)
London takes fourth place each year, with €133.2 in 2018 and
Geneva continues to rank as one of Europe’s leaders in terms of €134.1, the following year.
ADR, and in 2018 the city has an ADR in euro terms of €241.6
In recent years however, Geneva has been facing challenges in For Amsterdam we forecast €124.5 in 2018 and €128.9 in 2019.
maintaining its average rates and attracting leisure demand. In 2018, Rome and Milan follow, all with RevPAR above €100
and are joined by Lisbon, with €100.6 in 2019.
Paris follows in second place with ADR of €236.2 ADR growth
of 2.1% is forecast for 2018, mainly due to the upward trend in At the other end of the table, Berlin, Prague and Porto’s RevPAR
luxury hotel rates. Next comes Zurich with ADR of €197.1 and remains around €100 lower than that of Paris. In 2018, these
London follows with €162.4. cities could see RevPAR of €74.3 (Berlin), €74.9 (Prague) and
€77.5 (Porto).
10
Occupancy rankings
London is the fullest in 2018, tying with Prague in 2019
European cities hotel forecast for 2018 and 2019
2017 2018 (F) 2019 (F)
2017 rank 2018 (F) rank 2019 (F) rank
London (81.7%) 1 London (82%) 1 Prague (82.3%) 1
Amsterdam (81.5%) 2 Amsterdam (81.8%) 2 London (82.3%) 2
Prague (79.9%) 3 Prague (81%) 3 Amsterdam (81.6%) 3
Lisbon (77.6%) 4 Lisbon (78.1%) 4 Lisbon (78.8%) 4
Berlin (76.6%) 5 Berlin (76.9%) 5 Paris (77.9%) 5
Porto (76.4%) 6 Porto (76.7%) 6 Berlin (77.3%) 6
Paris (73.5%) 7 Paris (74.7%) 7 Porto (77.1%) 7
Zurich (72.8%) 8 Zurich (72.4%) 8 Zurich (73.3%) 8
Milan (70.5%) 9 Milan (71.7%) 9 Milan (71.6%) 9
Geneva (70.1%) 10 Geneva (70.5%) 10 Rome (70.6%) 10
Rome (70%) 11 Rome (70.3%) 11 Frankfurt (70.5%) 11
Frankfurt (69.5%) 12 Frankfurt (70%) 12 Geneva (70.4%) 12
Source: Econometric forecast PwC Benchmarking data: STRADR rankings 11
Geneva tops the charts each year but Paris
closes the gap in 2019
European cities hotel forecast for 2018 and 2019
2017 2018(F) 2019 (F)
2017 rank 2018 (F) rank 2019 (F) rank
Geneva (€242.9) 1 Geneva (€241.6) 1 Geneva (€245.8) 1
Paris (€231.3) 2 Paris (€236.2) 2 Paris (€241) 2
Zurich (€203.9) 3 Zurich (€197.1) 3 Zurich (€195.6) 3
London (€169.2) 4 London (€162.4) 4 London (€163) 4
Rome (€145) 5 Amsterdam (€152.2) 5 Amsterdam (€157.8) 5
Amsterdam (€142.6) 6 Rome (€147.1) 6 Rome (€148.8) 6
Milan (€137.2) 7 Milan (€140.2) 7 Milan (€144) 7
Frankfurt (€122.1) 8 Frankfurt (€121.1) 8 Lisbon (€127.7) 8
Lisbon (€113.8) 9 Lisbon (€120.9) 9 Frankfurt (€125.3) 9
Berlin (€95.7) 10 Porto (€101.1) 10 Porto (€105.8) 10
Porto (€92) 11 Berlin (€96.6) 11 Berlin (€98) 11
Prague (€85.6) 12 Prague (€92.6) 12 Prague (€95.5) 12
All annual figures are calculated as unweighted monthly averages as our approach does allow forecasting of monthly demand weightings
Source: Econometric forecast PwC Benchmarking data: STR12
RevPAR rankings
Paris tops the chart in 2018 and 2019
European cities hotel forecast for 2018 and 2019
2017 2018 (F) 2019 (F)
2017 rank 2018 (F) rank 2019 (F) rank
Geneva (€170.3) 1 Paris (€176.3) 1 Paris (€187.6) 1
Paris (€170.1) 2 Geneva (€170.3) 2 Geneva (€172.9) 2
Zurich (€148.4) 3 Zurich (€142.7) 3 Zurich (€143.5) 3
London (€138.2) 4 London (€133.2) 4 London (€134.1) 4
Amsterdam (€116.2) 5 Amsterdam (€124.5) 5 Amsterdam (€128.9) 5
Rome (€101.6) 6 Rome (€103.4) 6 Rome (€105) 6
Milan (€96.7) 7 Milan (€100.5) 7 Milan (€103.1) 7
Lisbon (€88.2) 8 Lisbon (€94.4) 8 Lisbon (€100.6) 8
Frankfurt (€84.9) 9 Frankfurt (€84.7) 9 Frankfurt (€88.3) 9
Berlin (€73.4) 10 Porto (€77.5) 10 Porto (€81.6) 10
Porto (€70.3) 11 Prague (€74.9) 11 Prague (€78.6) 11
Prague (€68.4) 12 Berlin (€74.3) 12 Berlin (€75.8) 12
All annual figures are calculated as unweighted monthly averages as our approach does allow forecasting of monthly demand weightings
Source: Econometric forecast PwC Benchmarking data: STREuropean cities hotel forecast for 2018 and 2019
1314
Economic, travel and supply drivers
European cities hotel forecast for 2018 and 2019
Relatively upbeat global growth is forecast, with the peripheral Eurozone
economies expected to outpace the core. Both strong wage growth and high
employment should support leisure and travel spending.
Global:
The global economic outlook is relatively upbeat with global
economic growth in 2018 on track to be the fastest since 2011.
In our main scenario, we project the global economy will grow
by almost 4% in purchasing power parity (PPP) terms, adding 2018
an extra $5 trillion to global output in current value terms.
More importantly, we expect growth to be broad based and
synchronised, rather than dependent on a few countries.
This has supported declines in unemployment which we HOTEL
expect to reach a 40 year low across the G7 in 2018. We 2011
expect unemployment to dip below 5% – equivalent to about
19 million workers which may support a pickup in wage growth.
This could be driven by tight labour markets like in the US
which is expected to hit an unemployment rate of about 4% HOTEL
but offset by other economies like Italy, where unemployment
levels remain relatively high. Both strong wage growth and high
employment should support leisure and travel spending.
Economic outlook
should support leisure
and travel spending:15
European cities hotel forecast for 2018 and 2019
Eurozone: UK:
In our main scenario projections for 2018, we expect the The UK economy held up well in the six months after the EU
GDP‑weighted growth rate of the peripheral Eurozone referendum, but growth slowed markedly from early 2017 as
economies to exceed that of the core. Specifically, we expect consumer spending growth moderated. A key factor behind
growth of around 2.5% in the periphery and 2% in the core. that moderation was the increase in the rate of consumer price
inflation (CPI) from around zero on average in 2015 to 3% in
This would be the fifth consecutive year the peripheral
the year to January 2018, as global commodity prices have
Eurozone economies have outpaced the core. Of the larger
picked up from lows in early 2016, and the effects of the weak
Eurozone economies, the Netherlands is expected to lead
pound after the Brexit vote have fed through supply chains.
the core economies’ performance (2.6% growth). Ireland is
Higher inflation has squeezed real household incomes and this
expected to be the fastest growing peripheral economy (3.5%
has taken the edge off consumer-led growth. Brexit-related
growth). Greece is likely to exit its performance programme in
uncertainty has also dampened business investment growth.
August marking the first year since 2009 where no Eurozone
economy is under IMF surveillance. Germany will continue In our main scenario, we project UK growth to remain modest at
to post the world’s largest current account surplus in absolute around 1.5% in 2018 and 1.6% in 2019. This is due to continued
terms to the tune of over $300 billion. By contrast with the subdued real consumer spending growth and the drag on
recovering Eurozone, uncertainty relating to Brexit is expected business investment from ongoing economic and political
to drag on UK growth, which is expected to be only around uncertainty relating to the outcome of the Brexit negotiations.
1.5% in 2018. The Bank of England could raise interest rates once or twice
this year, though the pace of increase will remain limited
One risk to this picture however is the beginning of the end of
and gradual.
easy money. Since the US Federal Reserve started to gradually
reduce the size of its balance sheet and raise rates, the question
has been who will follow next. We expect the European Central
Bank (ECB) to further reduce its monthly asset purchases
in 2018. If Eurozone inflation rebounds faster than our China:
baseline projection, 2018 could see the end of the ECB’s asset We project China, the world’s largest economy in PPP terms,
purchase programme. to grow by around 6-7% in 2018. At the 2017 party congress,
President Xi outlined China’s shift in focus from high speed
to high quality growth. This was coupled with supply side
United States: reforms addressing structural problems, such as excess factory
production and pollution. Any further, unexpected, reduction
The growth forecast for the United States has been revised up in Chinese growth (for example because of financial stability
given stronger than expected activity in 2017, higher projected issues related to high debt levels in the property sector) is a
external demand, and the expected macroeconomic impact of downside risk.
the tax reform, in particular the reduction in corporate tax rates
and the temporary allowance for full expensing of investment.
We are projecting US economic growth of 2.8% in 2018
and 2.3% in 2019.16
Global growth will continue to strengthen in
all major economies through 2018
European cities hotel forecast for 2018 and 2019
Canada
Russia
2.1 2.0
1.8 1.6
US
China
2.8 2.3 India
Mexico 6.5 6.3
7.4 7.6
2.1 2.2
Brazil
Australia
South Africa
1.8 2.1
2.9 3.0
1.3 1.5
Europe
UK
Ireland Netherlands
Germany
1.5 1.6
= % Real GDP 3.5 3.0 2.6 2.2
growth in 2018 Czech Republic
2.4 2.3
Global (MER) 3.3%
France
2.6 2.3
Switzerland
Global (PPP) 3.8%
Eurozone 2.2% 2.1 1.9
1.3 1.6
Italy
= % Real GDP
growth in 2019 Spain
Portugal 1.2 1.0
Global (MER) 3.1%
2.8 2.5
Global (PPP) 3.7% 2.1 1.7
Eurozone 2.0%
Source: PwC forecasts (March 2018), IMF World Economic Outlook October 2017A buoyant travel backdrop: 17
Another record year anticipated in 2018
European cities hotel forecast for 2018 and 2019
Stellar global travel demand drove 671m Results from the latest European Travel Commission
overnight visitors to Europe (ETC) Long-Haul Travel Barometer indicate that among
highest‑volume extra-European markets, intention for
There was particularly strong demand for international travel in
overseas trips in the first months of 2018 is strongest among
2017. Globally, according to the UNWTO, 2017 saw the highest
respondents from China. The positive sentiment in this market
tourism volumes in seven years. International tourism arrivals
is considered by ETC to be a reassuring indicator paving the
grew by 7% year on year to reach a total of 1,322 million
way for more than 12 million expected Chinese arrivals in 2018.
overnight visitors (for both business and leisure).
(ETC Dashboard, Tourism Economics 2017).
Southern and Mediterranean region
We expect the year could see a modest recovery in tourism
benefitted with 13% growth
to some North African destinations as well as Turkey, as no
Overall, UNWTO shows that Europe recorded above average frills carriers and tour operator begin to increase capacity
tourism growth with an 8% increase in international tourism again e.g. into Turkey and Tunisia, where the first UK charter
arrivals in 2017. The outstanding sub-regions were Southern flights recently returned since the Sousse terror attacks in
and Mediterranean Europe which saw a remarkable 13% growth 2015. The ‘North African effect’ benefitting Europe’s southern
over the prior year. Northern Europe and Central Europe both Mediterranean destinations could slow, although safety and
saw 5% growth, while Western Europe saw a 7% gain. security concerns are likely to sustain the tourism boom for
some time yet.
Which countries were winners?
What next?
Data from the European Travel Commission (ETC) show that
in 2017 Turkey (+28%) experienced an impressive rebound in While volumes rise, what travellers expect from their holidays
visitor arrivals with growth largely driven by Russian travellers continues to evolve – short breaks remain popular, personalised
(+465.2%). Iceland (+24%), the fastest growing destination packages too, travellers want something different e.g. visits
since 2012, showed robust results while its government to less well known centres in popular countries and new
considers measures to address overtourism. In southern Europe, experiences ranging from expert led running excursions around
destinations like Montenegro (+19%), Serbia (+18%) Malta landmark sites to culinary skills courses, combining business
(+16%), Slovenia and Cyprus (both +15%) also boosted growth and leisure, staycations and so on. Where travellers choose to
and have proved their success in overcoming seasonality. stay is also clearly evolving.
Finland (+14%) enjoyed a solid increase driven by Chinese
Looking to this year, we remain cautiously optimistic as the
and Indian arrivals. Established summer destinations Croatia
improving economic outlook across the Eurozone continues to
(+14%), Portugal (+12%) and Spain (+9%) also saw healthy
drive holiday and business demand. On the flipside, a stronger
growth. ETC reports that in Spain political tensions in Catalonia
euro may deter some inbound visits and slower US travel
didn’t depress tourism demand while improved air connectivity
growth may result from a weaker dollar and rising transatlantic
continued to underpin Portugal’s strong performance.
airfares. Nevertheless the overwhelming message is growth
More than 12 million Chinese visitors expected in 2018 and the UNWTO is predicting growth of 4-5% in international
tourism arrivals to Europe in 2018.
Besides the strong demand from intra-European markets, US,
China and the Russian Federation have contributed significantly
to the reported growth in tourist arrivals to Europe.
There is no sign that the
travel boom is running
out of steam yet.
Source: PwC forecasts (February 2017), IMF World Economic Outlook October 201618
Supply backdrop remains benign:
But hotspots challenge some cities
European cities hotel forecast for 2018 and 2019
A fragmented sector with around 5 million rooms Sharing economy booms
There are close to 5 million hotel rooms in Europe and the At the same time alternative accommodation platforms such
sector remains fragmented with around 3 million unaffiliated as Airbnb and serviced apartments also compete for tourists,
rooms. Around only 15% of rooms in Austria are affiliated and the commentaries in the city pages of this report suggest a
to a chain compared to 57% of rooms in Spain, according to significant increase in shared home listings as well as municipal
Horwath HTL (European Hotels and Chains Report 2017). reactions to control unfettered growth. Many destinations are
now heavily regulating many aspects of Airbnb.
According to STR data, there are a total of 308,000 rooms in the
development pipeline with 105,000 in construction and 69,000
in final planning.
Tighter regulation: the shape of things to come?
In some cities concerns about overtourism and damage to
residential quality of life means that they seek to regulate the
development of new hotels in certain areas. For example, in
Amsterdam, the policy of ‘NEE, tenzij’ meaning ‘NO, unless’,
seeks to ensure hotels wanting to develop in central Amsterdam
Supply growth has remained
only develop what is best for the city, with projects that are relatively constrained in many
creative, economically support the neighbourhood, have a good
social plan and are sustainable.
destinations across Europe and
There are still hot spots
this has allowed occupancies to
At the same time as there being relatively low overall new
soar, driving up ADR. But how
supply levels, some cities have high pipelines and this includes long can this continue?
London (with the highest pipeline) where some 9,000 rooms
could open in 2018 – more than opened in 2012 when there
was an Olympic sized demand boost. Berlin has around 6,500
new rooms in the pipeline with almost 4,000 of these already
under construction. Some other cities with sizeable numbers of
rooms under construction include Istanbul (3,000+), Moscow
(3,400), Munich (3,000+), Hamburg (2,770), Dublin (2,600),
and the total number of rooms in Amsterdam will grow by
approximately 7,000 rooms by 2020, when the new restrictive
planning regulations start to bite. Zurich will see 2,800 rooms
built in the next three years.19
European cities hotel forecast for 2018 and 2019
In Milan, the budget and limited service segment
is considered to have high potential with chains
including Meininger, Motel One, Moxy, and B&B
Hotels expanding in the market.20 Four challenges facing hotels
European cities hotel forecast for 2018 and 2019
Despite the positive growth forecasts there are clearly additional challenges
facing the sector in Europe. Recent research undertaken in the Scandinavian
hospitality sector by PwC consultants in Denmark, Sweden and Switzerland,
highlighted eight highly topical issues across the region.* Here we highlight four
of these topics and their relevance across Europe. These include profitability
erosion; changing guest needs; the sharing economy and growing concerns
around overtourism.
* The hospitality market in Scandinavia October 20171 21
Profitability erosion – why me? PwC’s opinion
European cities hotel forecast for 2018 and 2019
What can I do about it? We think OTAs have an important role to play in selling perishable
RevPAR used to be a reliable KPI for measuring the strength and goods (rooms) and should be integrated in a well-defined
performance of hotel markets. In recent years, however, increased corporate and property-based revenue management strategy.
RevPAR has not automatically translated into increased profitability
The aim for a smaller chain should therefore be to formulate a
(GOP). From our varied conversations, we understand that one of
coherent strategy at corporate level while providing the properties
the main factors causing this profitability erosion is the increasing
with support in the form of processes, systems, and human
cost of rooms sold, especially as a consequence of increased spend on
capabilities to enable them to implement the daily tactics of
commissions. Depending on the market strength of a property, OTAs
the strategy.
ask for commissions as high as 20% to 25%. If the proportion of the
inventory sold via OTAs is high, this can be a considerable cost to a A robust monitoring and control framework will give the
property or small chain. In our discussions with industry professionals, management a solid decision-making basis and the relevant
opinion has been divided in terms of how to best deal with OTAs. framework for reducing the proportion of rooms sold via OTAs to
While some players prefer to get rid of OTAs completely, others a reasonable level for driving margin. A bigger threat for operators
have responded by implementing strong revenue management and who decide to sell a large proportion of room stock via an OTA
distribution guidelines to curb the proportion of inventory sold via the is the loss of guest data. As we move into a world where data is
OTA channel. Some players are even considering making a larger share king, we are convinced that comprehensive, organised and easily
of hotel room stock available for sale via OTAs and reducing their own retrievable guest data will be a vital ingredient in the profitable
sales force. A consequence of this is that they would lose direct contact growth of operators going forward.
with these guests and the advantages of their loyalty. Most of the
industry experts we talked to placed great emphasis on loyalty schemes
as a way of ensuring direct bookings.
A key risk for hoteliers is the ageing of the customer base and
the need to capture a new generation of customers. We carry
out a lot of discussions with start-ups to better understand how
we can collaborate to reach younger customers and see how we
can adapt our offer to better suit the needs of Millennials.
Julien Guintrand, Group Finance Director, B&B Hotels, 2018
2
Changing guests needs – how can we adapt to PwC’s opinion
the needs of new market segments? Adapting to changing guest requirements is a challenge for all
As the proportion of international guests has grown steadily, this is in hoteliers around the world. The recent trend to increased tourism
theory good news for hoteliers across Europe. But the trend does bring worldwide driven by low-cost airlines, cheaper hotel offers and
globalisation has increased the number of people travelling to
challenges of its own. One challenge is to adapt products and services
destinations they would not have visited 20 years ago.
to the requirements of new guest segments. For example, industry
experts cite Japanese tourists’ desire to have a bathtub in their room, In our opinion, two tools are becoming indispensable for hoteliers
while American guests look for comparatively large rooms and Chinese who want to find out what guests want. First, hoteliers need to
thoroughly analyse online guest reviews and use review comments
guests want basic cooking facilities. But its not just about the needs of
as a foundation for CAPEX and operational process decisions.
international travellers, domestic travellers also have changing needs. Online comments should not be a ‘nice to have’, but should be
Different generations of travellers may also have specific requirements. treated as the most important source of guest feedback and taken
Much has been written about Generation Y known as Millennials as a basis for change. Secondly, the industry needs to leverage
(23-36 years). But, don’t forget about other groups such as Generation rapid developments in digitalization and big data to capture,
X (37-53 years), or the Baby Boomers (54-74)and the upper age cohort segment, analyse and group guest data in the most useful way.
of Generation Z, the so called Smartphone generation (8-22 years). Another way to adapt product and service offerings on a market
level would be the addition of international operators and their
Segmenting by context/need for travel/brand/budget may also see
distinct products.
similar requirements and buying patterns across these different
age groups.22 3
The threat of overtourism – PwC’s opinion
European cities hotel forecast for 2018 and 2019
when is many too many? Recent news, especially from Amsterdam, Barcelona and Venice,
Can there be such a thing as too many tourists? Many industry show the difficulties faced by cities trying to deal with a huge surge
players we talked to answered with ‘No’. At the same time we see the of tourists in a relatively short period of time. Noise, litter, and
residents of Amsterdam, Barcelona and Venice starting to oppose ‘not recognising my own city any more’ are the most frequently
ever-growing numbers of tourists. For example, in Amsterdam, the cited complaints from residents. Lessons should be learnt from the
policy of, ‘NEE, tenzij’ meaning ‘NO, unless’ seeks to ensure hotels struggle of cities that have already experienced a high influx of
seeking to develop in central Amsterdam develop what is best for the tourists. For this reason we believe that increasing international
city and are creative, economically support the neighbourhood, have demand for key destinations needs to be carefully managed.
a good social plan as well as sustainable. Interestingly, PwC research An approach to controlled growth should include formulating
amongst hotels in Copenhagen revealed they were not directly worried a clear destination strategy, including a clear positioning, as
about overtourism. Their primary concern was the risk of hasty a basis for government action and the provision of private
political decisions to limit tourism or hotel expansion if politicians services, including city planning, and zoning, hotel development
see overtourism as a significant threat. regulation, centralised product offering planning, infrastructure
planning, and so on.
Overtourism: primarily up to destinations to exert a controlling
interest. Intelligent marketing concepts can help reduce the
numbers at hotspots.
Norbert Fiebig, President, German Association DRV
4
Sharing economy – ignore or embrace it? PwC’s opinion
In recent years there has been a considerable increase in renting There are two sides to the coin when it comes to the impact of
out private homes and rooms via online services. One of the largest Airbnb on demand generation. On the one hand the new offering
providers of private home rental services is Airbnb, an online attracts new guest segments to destinations they wouldn’t
marketplace for renting out and booking overnight accommodation. have travelled to previously. They eat in restaurants and visit
The number of bookings via Airbnb is still sky-rocketing, and it’s attractions, so for the destination as a whole this is a great benefit.
emerging that in addition to private renters, the popular booking The other side of the coin, of course, is that some guests who have
portal is increasingly being used by professional rental operators as a previously gone to a hotel now use Airbnb, which means a loss
distribution channel. Currently the mid to lower-range hotel segment is for the hotel industry. The hotel industry should take care not
hardest hit; upmarket and luxury products aren’t likely to see the same to make the same mistakes with Airbnb that it made with OTAs
impact. At present, privately sharing a home online is an unregulated 20 years ago, when most players expected the new channels to
market. Many destinations are now going down the route of regulating disappear as quickly as they had sprung up. Instead, the industry
and fining Airbnb. should listen very carefully to guests who are saying that they’re
The Nordic countries have been quite open to the sharing economy. looking for authentic, real and tailored accommodation products
In Sweden, for example, ‘Allemansrätten’ – or the freedom to roam – is for a variety of needs – on different occasions the same person
a principle protected by law that gives all people the right to be free in may be travelling with their spouse, on business, or on a stag
Swedish nature and Sweden has launched a campaign listing the entire or hen weekend and take cues in terms of their product and
country on Airbnb, even camping grounds and meadows. service offering.
The ‘phygital model’ is at the heart of hoteliers’ concerns.
It has become essential to ensure continuity in the customer
relationship, by combining a high-performing digital platform
(i.e. including a chatbot) and a strong human dimension.
This model should allow hoteliers to better know and understand
customers and to provide more personalised services.
Nicolas Broussaud, Head of Transactions, AccorhotelsEuropean cities hotel forecast for 2018 and 2019
2324 Deal talk
European cities hotel forecast for 2018 and 2019
European hotel transaction volume increased 11% to €20.9bn in 2017,
surpassing the record-high levels seen in 2015. This was driven by an increase
in investment activity in the UK where owners are considering whether the
end of the current cycle is in sight, and in Spain where investors are sensing
an opportunity for yield compression in a maturing market.
Overview
European hotel transaction volume reached €20.9 billion in deal volume washotel
European a function of the
deal limited availability
volume (€bn) of product
2017. This was an 11% increase compared to 2016 deal volume in the market particularly in prime hotel locations.
and surpassed the record level achieved in 2015. The movement
The 2017 transaction market also saw sustained level of
in transaction volume continued to show a strong positive
investment in Pan European portfolios and high-profile
correlation to changes in RevPAR growth which increased by
transactions in the Netherlands, France and Italy in particular.
5.6% in 2017 compared to 2.1% in 2016.
The growth in transaction volume was driven by a resurgence
Deal Volume (€ billions) RevPAR Growth p.a. (%)
in UK hotel investment activity in 2017 and record levels
of investment in the Spanish hotel market. UK hotel deal 21 15
volume in 2017 increased by 34% from €4.7 billion in 2016 to
€6.3 billion in 2017 and represented 30% of the total European 18 10
hotel transactions by deal volume. This rebound from 2016,
which saw a cross sector decline in transactions due to Brexit 15 5
uncertainty, was driven by the completion of large portfolio
transactions in the second half of the year and an improved 12 0
sense of macroeconomic stability. The number of exits in the
second half of the year and the portfolios currently in market
9 -5
indicate that owners are considering whether we are potentially
approaching the top of the current cycle. Hotel deal volume in
6 -10
Spain more than doubled in comparison to 2016 with significant
portfolio and single assets being brought to market as investors
3 -15
sensed an opportunity for yield compression. Transactions
across the UK and Spain combined accounted for more than half
of total European transactions by deal volume in 2017. 0 -20
Source: PwC Analysis, RCA, HVS, Hotel Analyst, AM:PM, STR
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Germany meanwhile accounted for 11% of total European
transaction volume compared to 27% in 2016. This decline in Portfolio Single Rev PAR Growth (%)
Sources: PwC Analysis, RCA, HVS, Hotel Analyst, AM:PM, STR
Geographic split of transaction volume (€bn)
2016 2017
15% 11% Germany
19%
27% France
6%
Italy
4% Pan European
6%
United Kingdom
1%
6% 30% Spain
5%
Ireland
11% Rest of Europe
25%
8% 25% 4%
Sources: PwC Analysis, RCA, HVS, Hotel Analyst, AM:PM, STR2017 investment review At the start of 2018 it was reported that HNA Group was looking
Investment trends to exit its 29.5% stake in Spain’s NH Hotels, its 25% stake
in Park Hotels & Resorts and its stake in Hilton Worldwide.
European investors acquired some of the largest portfolio Given the debt issues and regulatory pressures HNA is facing,
transactions in 2017 in what was a continuation of the trend it will be interesting to monitor its stance towards its holding
observed in 2016. in Radisson Hotel Group (recently rebranded from Carlson 25
US private equity groups also acquired significant portfolios Rezidor Hotel Group).
particularly in Spain where Apollo’s acquisition of CaixaBank’s Anbang Insurance is also reportedly considering a part sale
European cities hotel forecast for 2018 and 2019
loan portfolio (Project Sun) and Blackstone’s purchase of of its holding in the US based Strategic Hotels & Resorts
HI Partners were amongst the largest ever transactions in the and the New York Waldorf Astoria. The disposals of these
country. However, Lone Star’s sale of the Jurys Inn portfolio assets could determine the potential exit route for Anbang’s
and Bain Capital Credit and Canyon Partners sale of the QHotel European investments too. Dalian Wanda’s recent sale of its
portfolio showed that North American private equity investors luxury hotel development at Nine Elms in London further
continued looking to exit their UK hotel investments. illustrates the wider sell‑off by large Chinese investors.
Real estate and institutional investors acquired the largest Despite recent acquisitions such as Anbang’s purchase of the
single assets in 2017 which was a deviation to the trend DoubleTree Amsterdam, perhaps 2018 will see an increase in
observed in 2016 where investment was driven by domestic outflow of Chinese capital from the European hotel market
private and private equity investors. as investors rebalance their portfolios amidst regulatory and
financial pressures.
Market trends
Current mega hotel company trends
The UK and Spain accounted for the five largest portfolio
transactions in 2017. The growth in European deal volume Following the completion of mega‑mergers in 2016 including
was largely driven by the increase in UK transaction Marriott International’s acquisition of Starwood Hotels and
volume following a subdued 2016 due to Brexit uncertainty. AccorHotels’ acquisition of Fairmont Raffles Hotels, a quieter
This increase saw the UK represent the largest proportion 2017 was to be expected as companies focused on post-merger
of deal volume by geographic split in 2017 – a return to the integration. InterContinental Hotels’ acquisition of a 51%
position it had held in 2015. The growth in Spain was fueled by stake in Regent Hotels in March 2018 showed that mega hotel
private equity investors who are seeing opportunities for yield companies continued to expand their brand offerings.
compression in a maturing Spanish hotel market. With AccorHotels continuing to progress with restructuring
Meanwhile the core and cosmopolitan cities of London, Paris its property subsidiary (AccorInvest) and HNA’s stake in
and Amsterdam accounted for the five largest single asset NH Hotels, Park Hotels & Resorts and Hilton Worldwide up
transactions in 2017 highlighting the ongoing demand for for grabs, 2018 could see significant changes in the ownership
prime ‘trophy assets’ from overseas investors. structures of mega hotel companies.
The 2017 European hotel transaction market also saw two What to expect in 2018
significant hostel transactions namely Queensgate Investments The start of 2018 has seen a strong level of investment activity
acquisition of Generator Hostels and TPG’s acquisition of A&O in the UK through the sale of SACO serviced apartments
Hostels. These transactions highlight the increasing depth of and with Lone Star’s sale of its Mecure/Hilton portfolio and
the hotel sub-sector which continues to become a mainstream Starwood Capital’s sale of its Principal/De Vere portfolio
asset class for global investors. reportedly progressing well. The Spanish hotel market has also
seen Blackstone’s takeover bid for Hispania and HNA’s stake
2018 deals outlook in NH Hotels being brought to market. Put together with the
A change in the flow of capital continued European and international interest in the German
The 2017 European hotel transaction market saw a slowdown hotel market, we anticipate European hotel transaction volume
in investment from Chinese investors who have accounted for to moderately increase in 2018 from 2017 levels.
more than €4.7 billion of investments since 2014. This was
driven by state regulations restricting outbound investment in
global real estate.
Top 5 portfolio transactions in 2017
Country Portfolio Reported Value (€) Type of Acquirer Origin of Acquirer
United Kingdom Jurys Inn c. €909m Real Estate Company & Hospitality Company Sweden & Israel
Spain Project Sun c. €700m Private Equity USA
Spain HI Partners c. €631m Private Equity USA
United Kingdom QHotel c. €571m Real Estate Investor United Kingdom
Spain 19 Merlin Hotels c. €559m REIT France
Top 5 single asset transactions
Country Hotel Reported Value (€) Type of Acquirer Origin of Acquirer
United Kingdom Grosvenor House Hotel c. €627m Real Estate Investor USA
France Westin Paris c. €550m Real Estate Investor United Kingdom
Netherlands DoubleTree Amsterdam c. €356m Institutional China
Netherlands W Amsterdam c. €260m Institutional Germany
United Kingdom DoubleTree Westminster c. €221m Real Estate Investor United Kingdom
Sources: PwC Analysis, RCA, HVS, Hotel Analyst, AM:PM, STR26 The European cities forecasts
European cities hotel forecast for 2018 and 2019
From Amsterdam to Zurich:
Which cities are best placed to grow in 2018 and 2019?European cities hotel forecast for 2018 and 2019
2728
Amsterdam
As hotel performance starts to peak, A notable Dutch portfolio transaction is the sale of the Dutch
hotel chain Bilderberg Hotels. European institutional funds,
existing Amsterdam hoteliers could soon
European cities hotel forecast for 2018 and 2019
together with investors from the U.S. and Asia are expected to
start to benefit (KPIs and values) as the be looking to invest in the Amsterdam hotel market and beyond.
city’s restrictive new hotel policy kicks in. Supply trends
Meanwhile, 2017 saw the greater Amsterdam Past municipal hotel policy (2007-2015) continues to impact
hotel market enjoy an extraordinary current supply levels. The total number of hotel rooms in
performance, as occupancy, ADR and Amsterdam will grow by approximately 5,150 room (+16%) to
total almost 37,170 in 2019. This will increase to approximately
RevPAR recorded major gains, partially 39,120 rooms per 2020. After 2020 the impact of the previous
fuelled by over 3% Dutch GDP growth in hotel policy is expected to diminish, as the new restrictive
Q4 2017. policy kicks-in.
At the end of 2017 Amsterdam had a total of 18,800 Airbnb
listings, a significant growth from 2015 (approximately 15,000
Role listings). The city has come to an agreement with Airbnb
Amsterdam is the capital of the Netherlands and also its regarding the maximum number of days in which a listing
financial and cultural hotspot. Its famous canals are listed on can be rented out. From 1 January 2019 this will be limited to
the UNESCO World Heritage List. The city can be seen as a 30 days per year, down from a yearly maximum of 60 days.
gateway into other parts of Europe, for leisure and business.
Opportunities
Amsterdam is economically and politically stable and is
Amsterdam saw more than 13.9 million overnight stays in 2016,
currently performing as one of the top global cities, in terms
increasing to 15.5 million in 2017. It’s expected that the volume
of quality of life and living. In 2017 the city of Amsterdam
of tourists traveling to the Netherlands will grow by at least
had a record number of tourists (6.6 million), with an
5%, in 2018. We expect that this will positively influence the
estimated increase of almost 12%, compared to 2016.
number of overnight stays in the capital.
Historical trading Due to the high level of supply growth expected for 2018/2019,
The greater Amsterdam hotel market has shown increased together with moderate growth in guest volumes in 2018,
KPI’s since 2009. The KPI’s reached new heights in 2017, we expect some pressure on hotel KPI’s outside of the city
with occupancy up by 4.1%, ADR up by 5.9% and RevPAR centre. However, as long as economic growth continues, two
up by 10.3%. years from now hotels in Amsterdam will further benefit in
Deals terms of KPI’s and hotel values, from the city’s restrictive
In 2017, the Amsterdam hotel market attracted the largest new hotel policy (2015-2021). The number of passengers served
volume of hotel investment in the Netherlands. A reported total by Schiphol Amsterdam Airport has grown from 63.5 million in
of approximately €1.1 billion worth in hotel deals have been 2016 to 68.5 million in 2017, an increase of 7.7%. The growing
done in 2017 on the Amsterdam market, with noteworthy single number of passengers is also expected to have a positive effect
asset transactions of DoubleTree by Hilton, W Amsterdam and on the demand for hotel rooms in Amsterdam.
the NH Barbizon Palace.
2018 and 2019 forecast: Annual hotel statistics
The Dutch economy is another of Europe’s strong performers
registering 3.1% growth in the year to Q4 2017. We are Occupancy (%) ADR (€) RevPAR (€)
expecting growth of 2.6% in 2018 and 2.2% in 2019. 2016 78% 135 105
Like much of the Eurozone, inflation remains muted at 1.3%
2017 81% 143 116
in February 2018 whilst the unemployment level was just 4.2%
in February 2018. 2018F 82% 152 124
Continued economic growth will stimulate further growth in 2019F 82% 158 129
business and leisure volumes to Amsterdam. While supply is
still increasing it is likely that in two years the more restrictive
planning regime will kick-in and support existing hoteliers.
Our latest forecast is for further strong RevPAR growth in 2018,
driven by robust ADR gains. In 2019, further but slower paced
growth of 3.5% is forecast, again driven by ADR, as occupancy Growth on previous year
dips marginally. Occupancy ADR RevPAR
2016 0.2% 2.6% 2.8%
Source: Data: STR Global 2018 Econometric forecast: PwC 2018
All annual figures are calculated as unweighted monthly averages as our approach
2017 4.1% 5.9% 10.3%
does allow forecasting of monthly demand weightings NB: in 2019, VAT will increase
2018F 0.4% 6.7% 7.1%
from 6% to 9%,. Demand remains strong and we do not foresee a major impact on the
forecasted ADR. 2019F (0.2%) 3.7% 3.5%You can also read
